For many of us, living from payday to payday is standard practice. However, just getting by is no way to live.
The idea of gaining financial independence is an attractive one, yet for many, even the possibility of being able to gain more control over money often sounds unrealistic. Nevertheless, it’s more possible than may be initially thought, although it takes a smart approach and some discipline to gain independent wealth.
What Does Independent Wealth Mean?
While the term “independently wealthy” means different things to different people, it usually means that your assets or wealth can sustain you throughout the course of your life with no need for reliance on others or employment for financial support.
To be independently wealthy, you’ll need to take a FatFIRE approach. This involves building a larger investment portfolio so more money can be spent during retirement. The FIRE plan involves retiring early with financial independence, but the FatFIRE approach is taken by those who plan to spend at least $100,000 each year during their retirement.
How Do I Become Independently Wealthy?
Now that you know what independent wealth means, the next step is to know how to achieve it. Here are some top tips to point you in the right direction.
Spend Less Than You Earn
While this sounds basic, it’s a rule that too many people fail to abide with. Overspending stops countless people every year from achieving their financial goals. Creating a budget, tracking your expenses, eliminating debts, and cutting costs are all part of this initial step towards financial freedom. One of the first steps you can take is reducing how much you spend going out. There are many options available for you to eat out for cheap and still enjoy a good meal and outing.
Investing With Intent
After you’ve eliminated your debt and reduced your expenses, you’ll be able to have a higher rate of savings as well as a wider variety of investment options. To achieve independent wealth, you must invest your money purposefully and wisely. There’s no need to be an expert in finance, however, it’s important to be educated on the basic concepts of investment such as how to invest in dividend stocks so you can be well informed when it comes to choosing the right portfolio for you.
One excellent option to suit new investors, as well as more seasoned ones, is to invest in index funds. This requires minimal knowledge since you’ll simply be investing in an index and therefore, you won’t have to make any selling or buying decisions yourself.
Long-term investors are also committed to looking for the best long-term dividend stocks. By making the right investments with a view to the long-term future, it’s possible to live off those dividends in retirement.
Staying The Course
The goal of becoming independently wealthy will always be a long-term one. Discipline is required to stick with it right to the end. Luckily, there are many platforms that help with beginner investors and even experts to stay on track (check out this M1 Finance review as an example). If economic and financial conditions worsen, it can be tempting to give up or rethink your investment strategy. However, keeping the bigger picture in mind is important, even when the going gets tough. Remembering the short-term losses and gains aren’t too significant in the long-term is key. Inevitably, there’ll be times when investments’ value drops. Yet, if you take an investment approach that has been proven to be successful in the long-run, hold fast to your course and you won’t regret it.
Increasing Your Income
We’ve already looked at the importance of reducing your expenditure in gaining financial independence, but another key factor is increasing your income. These two things taken in tandem will give you the best possible chance of speeding your savings progress and maximizing your rate of savings.
The route you take to increasing your income will vary depending on your circumstances. You may seek out a higher-paid position or ask for a raise. Alternatively, you may take on a side gig to make more income. This will allow you to harness the potential of a hobby or out-of-work activity to bring in some extra cash that you can put towards your investments.
Getting On Track To Independent Wealth
If you follow these steps in the long-term, you’ll find that becoming independently wealthy is more possible than you ever imagined. With the right approach, you can gain more freedom and control over your money. Of course, it won’t always be easy, and there are sacrifices to be made. Nevertheless, your goal is an achievable one.
Once you’ve determined that gaining independent wealth is the right course of action for you, it’s time to take action straight away. The sooner you put your plan into practice, the sooner you can achieve your financial aims and enjoy a more fulfilling and comfortable lifestyle during your retirement. The expert tips that we’ve provided here will point you in the right direction to help you attain financial independence so you can reap all of the benefits of a frugal lifestyle today.
